The Spanish-German rivalry goes well beyond football. The two countries have fought over bank stress tests recently as they aim to divert attention from their struggling regional financial institutions. Both countries have a two-tier banking structure, with big, international banks, such as Santander or Deutsche Bank, but also a second group of smaller, regional banks.

Spanish Cajas – small, regional savings banks – account for about half of the country's financial system. Mostly run by local government with officials appointed in proportion to the regional parliament, the Cajas enjoy special tax breaks because their main goal is to invest in the region, spurring growth and development.

Although, in principle, they are non-profit organisations, the Cajas jumped on a lending spree from the late 1990s, funding real estate projects across the country. Some Cajas' loan books almost quadrupled during the bonanza years, between 2002 and 2007 and mortgage delinquencies are twice as high as bigger banks. Two Cajas have already been rescued by the government, Cajasur and Caja de Ahorros Castilla La Mancha.

The government is now on a rush to push mergers in the sector, reducing the overall number of Cajas from 45 to about a dozen.

Germany's eight Landesbanken are also under scrutiny, as the loss of their state-guaranteed status has increased their funding costs. The institutions, owned by local savings banks and regional governments, do not usually attract retail deposits, forcing them into the capital markets to raise funds.

"Do we need eight Landesbanken in Germany?" asked Konrad Becker, an analyst at Merck Finck & Co, in Munich. "The costs to revenues is very high, so by merging them, costs would be reduced significantly."

In both countries, the state is expected to fund or help any re-capitalisation needed, analysts say. "They don't have any other option, any other answer would be chaos," said Gary Jenkins, an analyst at Evolution Securities, in London.

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